Do We Hate Solana?

The bull market's in, and when you use uh Salana, it's got fantastic user experience. Let me just say that. One of the best wallets come out of the community, the Phantom Wallet. Fantastic user experience, right? It feels very good to get a transaction through to end pay like, you know, micro fractions of a cent and to do many of the things that the original Ethereum Vision uh promised.

All right, David. So we put out a uh bankless takes yesterday and uh got a lot of feedback from that on top of Twitter, YouTube comments. And actually the highest signal for me is uh the Bankless Citizen Discord.

Yeah.

So that's where, you know, bankless takes it.

Yeah. And so uh some of the feedback is basically like I I guess I would summarize.

Uh can we start with what's the bankless takes episode? What is the structure of this?

Yes, the Bankless Takes episode is a episode that you and I kind of formulate um based on the last week of our hot takes, things that we're thinking about or the conversations.

Just just takes opinions, stuff we're thinking.

Yeah, opinions. And the conversations that might be um going into crypto Twitter. I think when we were preparing this week's takes agenda, it was basically like um what I really cared most about was talking about um the bull case for Ethereum.

Right.

And how

yeah, and how it feels like it has a lot of strengths and you know, 2K is undervalued like going into the bull market. So that was my main take, the main thing I wanted to talk about. Also on the menu, there was a big uh Twitter discussion about uh Solana. Um, there was conversation about it's it's Solana doing a flipping. We had a discussion about this, and I was like, David, I don't even know if we should talk about this at all because

Uh what specifically, the Solana element.

Yeah, the Solana element because

Because the the ETH element was ETH's fundamentals are really strong, and also fundamentals are and understanding them are important. And one of the uh meta conversations that was happening in the uh Twitter sphere was the uh back and forth between Fishy and um um Santiago on the podcast. And Fishy was all about like you just said that Solana has a 20% chance of flipping Ethereum. What fundamentals are you basing that on? Basically saying, like, you can't you are just making this up because how can you not because of the fundamentals are missing?

so I totally understand how they were related and that's why we ended up including it. The the reason that I was cautious about that is because like that can feel like punching down or that can feel like dunking and that can feel like negative hate content.

Right. 'Cause

When you're because

it's our takes, 'cause it's our opinion.

Yeah, when you're saying that like this one thing is great.

Uh-huh.

But this other thing that Mark the market thinks is great and that a whole bunch of users think is great from an asset value accrual perspective, this other thing like is maybe isn't so great.

Right. The incumbent, the big one, is fantastic. And the the disruptor, the smaller one, the one tenth of the size of the one, is shitty and bad.

So I didn't want to uh like my instinct was we shouldn't include it. Like we shouldn't talk about it because just the perception is you're propping up one thing and you're punching down the other. Right. When really I think we ended up including it. And the case for that was basically well, it's all the same conversation about like what are crypto fundamentals.

Right.

And and that is the the topic. So, like part of the Twitter conversation uh here, this is a tweet from Italio, just watched the latest bankless HQ episode and quote, it's Solana's more narrative than actual fundamentals. One of us may have said that, probably said that. Um, and he goes, You have an L2 and 527, you have an L sorry, you have an L1 and 527 L2s stuck in a vicious infrastructure cycle, but that's fundamentals for these guys. I'm going to put Ryan in the BitBoy category from now on. So I had a nice little uh conversation with this guy on Twitter. Um, and I said this Ethereum was also more narrative than fundamentals last cycle, but by fundamentals, I mean profitable block space sales, and I defined it as such in the episode. It's fine if you disagree, I could be wrong.

Right.

It's a bankless takes episode, so we give our hot takes. One thing I'll just say there is like that's what the episode is. It's our hot takes. I don't know that um

is this episode format a good idea?

It's in the name. It's in the name. Yeah.

I don't know. Some people like it. Some people like the space. I guess some the spice. I guess some people get um upset uh when we give kind of our raw takes, but that that's the episode format. And he he goes, he continues, for whatever reason, your hot takes about any network that's not ETH L2s are just bad takes. I understand we are all biased towards something, but come on. I asked him, what am I most wrong about? Would you say he's the entire thesis around Ethereum layer twos versus Solana? And I said, it's an investment thesis. You're welcome to have your own, argue for it, right? Like, that's it. It's an investment thesis. I think the quest here is, and maybe this was kind of lost in translation or just like the perception of us continually dunking on Solana is I am, like and uh you are, um trying to understand how to value assets in this space.

Yes. It's been one of the longest pursuits of what we've been trying to do in this space.

And

I think that's important.

To have some sort of consensus take that we all as an industry and that everyone like looking at these assets, looking to buy them, has a framework for valuing them. Because if we don't, okay, any pump and dump like memetic narrative thing can go from like one to two thousand, twenty thousand, and then back to zero, and it's all mimetic. It's all a bunch of Dogecoin.

And I my hope for this industry is that we get beyond memetic pricing and we actually, just like other capital assets in the real world, we have some takes on how to value this space. And yes, we might not get it right. We have to change this over time, but that to me is like a sign of maturity.

And uh it's important. So I'm always looking for it. And I'm open to adjusting what the fundamentals are and how to value the space. But like

if we don't have some sort of foundation for how we talk about these assets and value them, aren't we just falling prey to whatever like pump and dup narrative memetic thing exists? And we're just a bunch of memes, aren't we?

You give room for things that absolutely have zero fundamentals to pretend that it does have fundamentals. And one thing I think one mistake or just problem that we produce when we do these bankless takes episode is that there's a lot of motivations about like, hey, why are we saying the things that we're saying or doing the things that we're doing that aren't totally upfront because people haven't been listening to Bankless forever and they don't understand like David and Ryan's emphasis on fundamentals or the motivations. And then we are also the opinionated media company who's got opinions about stuff. And so that those two particles combine and it results in the effect of just like Ethereum's got the fundamentals, that's why we emphasize it, that's why we talk about it. It's good for the industry that the number two blockchain has very strong fundamentals. That's why I believe in the flippining, and that's that's just grounding crypto in reality, which it's been disconnected for for almost its entirety of its existence. These are the things that we want to see more of in the industry. And then when we see like so much just like narrative excitement around Solana and we don't see that same grounding in reality.

It turns into us punching down.

I I wanna I I I I want to kind of flip that a little bit because it is true, and this criticism is important that we hear and receive that is just like we have a narrow definition of uh fundamentals right now.

Yeah. More narrow than what people like to accept or want to accept or agree.

So like the narrow definition of fundamentals that we were talking about in that episode is basically like capital asset fundamentals. It's like PL. It's like

Like, I'm under the b like belief right now. I think that we can start to value our layer one assets based on how much cash

It actually uh throws out like discounted cash flow, like school of finance. Other people will say, What the F are you doing? Like one, it's way too early to do that. This asset class can't be valued like other asset classes, yeah. We're still trying to figure this out. And so don't even talk about um, you know, block space profit or revenue or anything like that. Doesn't matter. Another school of thought will say, Well, actually, we don't want any of these things to be profitable at all. Like, it's a fantastic strategy for a blockchain to subsidize user fees in order to get more users through issuance. Like, that's a brilliant way to do it. It's called business development, it's called growth. And why are we getting on our high horse when we have like you know, the population of a uh a mid-sized US city using crypto right now, right? And like we're actually the the prize is uh millions of of users, and so the actual fundamentals here should be user experience, like active users, like the apps, uh the dev teams. Like, is it is it is it actually going to work and onboard people? And you, bunch of uh ETH holders and maximalists, are narrowly defining it as how much block space you sold. And like, who cares? It's all about network effect and users, and people are using chains like Solana, and they're like, this is better.

Right. Feels

It is way better.

Yeah. Uhhuh.

It's way better than Ethereum, uh, for instance. Ethereum layer one uh main chain from a UX perspective, and they're seeing the fragmentation of layer twos, and being like, so this is your great solution to that. That's what they mean by fundamentals. And we have a more narrow definition when we were talking about it in yesterday's episode.

Okay, I think uh I think that our narrow definition of fundamentals is correct. In

well, it's just correct. In the longest of terms, it becomes more relevant, and I will take the fact that in the near term that it doesn't really matter. It's more noise. And you know, if you invested based off of like blocks-based sales or fundamentals, you would not have made as nearly as much, you would you would be have underperformed the market probably in the fullness of time because it's all narrative based, right? And so there's this era in crypto in which narrative really, really matters because this is very young industry, and we're all trying to price in the future when there's such little th um amount of reality grounding.

I think that's what that that's what people um stumble on, David, when you say it's all narrative based, right? And that's what they like people are jumping on, and I I think justifiably so in some cases. Bad UX is not just a narrative.

Like that's a fact.

Yes. Yeah.

Like

uh paying $10 for a transaction,

Mm-hmm.

like when you're just trying to send money from one place to another, that's not a narrative. That's a fact.

Yeah, but it's like it's derived the whole idea of block space sales is

To me, like a first principles version of valuating fundamentals. And I I accept that it's like that's a narrow way of doing this. Uh like just having good UX is something that people experience like and firsthand and that turns into their version of reality, which is totally like valid. And it's like secondary to the fact like that's great that you have UX, but does it translate into block space sales? The reason why block space sales are so important is that and you were the one of the core tenets of the bankless thesis is positive positive economics. Because positive economics means that your system is going to stand the test of time. It captures more value than it leaks. If your system leaks more value over time, then in the fullness of time, it will eventually not work. It will eventually dissipate. It might be, if you only leak a little bit of value, it might work for like, I don't know, a very long time, thousands of years perhaps. And so, granted that there is wiggle room here with how fast your system leaks value versus how fast it doesn't, like Terra Luna leaked way too much value way too quickly. Um, and but still the point stands that there's this very concrete uh way of evaluating systems, which is does it is it positively economic? Does it capture more value? Yeah, and then you can say, like, okay, well, Solana, yes, it leaks value, it inflates, but look what you get from that inflation. You get like super strong UX, you get you know instant transaction finality, you get uh like insane throughput. And so, yes, like Solana is not positively economic now, but what it is now is fantastic UX. But I would still call that like a second order fundamentals. Does that make sense? Is that a fair top?